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tv   Politics and Public Policy Today  CSPAN  January 29, 2016 5:00pm-7:01pm EST

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those drugs allowed to come into the market after a drug manufacturer's patent expires over a period of time. generic drugs have to have fda approval also these copies, but they don't have to have full clinical trials and so a lot of expense is avoided. as a result, more generic drugs in the market create competition and lower prices for consumers. over the last 30 years what we've seen is that today now 88% of prescription drugs purchased in the united states are generic drugs, 30 years ago that number was zero. however, in 2012, 26 years after the first law passed, it became clear the drug approval program needed an overhaul. more generic drugs are coming from overseas, companies in china and india are inspected less frequently than american companies. this put patients at risk and
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companies at a disadvantage. there's a backlog of 4,700 applications waiting to be reviewed and the median approval time to get review of the generic drug was 30 months. that far surpasses the 180-day time frame for review that was laid out in the hatch/waxman amendments in 1984. additionally in 2012 many generic terresterile injectables were in shortage and hospitals and doctors had to scramble to make sure the patients were getting the best treatment possible. congress passed these amendments in 2012. it's based on similar agreements with other manufacturers and the fda. congress anticipated that generic drug facilities abroad would be brought up to the same standards as facilities in the u.s., too, that american patients would benefit from faster approval of generic drugs and those two actions together would create more competition lower the price for the drugs.
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but as i mentioned in 2012, there was a backlog of 4,700 pending applications and the information we have shows that that's dropped to 3,500 applications. the hhs inspector general has reported that the fda's improving its inspections abroad, but the troubling news is that it seems to take fda longer to get generic drugs through the approval process. the approval times -- the median approval times have slowed from 30 to 48 months. and the original number hoped for was 180 -- 180 days. as we discuss these issues today, i think it's important to keep in mind that drug pricing is a legitimate, real concern of americans, but it's part of a larger concern of rising health care costs. congressional budget office announced this week that federal spending for the major health programs, medicare, medicaid, et
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cetera, represents the largest fraction of the projected growth of mandatory spending in 2016. two, while we're lowering prices we want to make sure we continue to invest in and incentivize the development of lifesaving therapies. congress has responded to that. senator murray's leadership and senator blunt especially adding $2 billion to the appropriation process for nih, $32 billion for nih in a year, but the pharmaceutical manufacturers spend 50 billion in a year. coming up with new cures and treatments. third, to try to balance the growth of the restraining the growth of drug prices and encouraging investment in incentives for lifesaving therapies we need to avoid unnecessary regulatory burdens that drive up costs and we need to do our best to keep the marketplace competitive. for the last year we've been working in a bipartisan way on ways to avoid unnecessarily
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regulatory burdens. in the aging committee senator collins and mccaskill have been examining what improvements may be necessary to ensure that the fda expedites applications for generic drugs to keep the marketplace competitive and drug prices down. but, still, over the last 30 years this is a success story. generic drugs have gone from zero to 88% of the marketplace. it's hard to imagine what the prescription drug market today would look like without them. i look forward to the testimony today. senator murray? >> well, thank you very much, chairman alexander, director woodco woodcock, thank you very much for being here and taking the time to be here and all your work on behalf of our families and communities. i'm really glad we have the opportunity to talk about the fda's generic drug program. this is a program that is absolutely critical to helping patients get safe, affordable, high-quality treatments more quickly. generic drug user fees have significantly improved the fda's ability to keep up with the large volume of generic drug
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applications and it has helped build on the important work done in hatch/waxman to incentivize information and expand access to the best treatments and cures available. there is, of course, room for improvement. while it was certainly a big undertaking to establish this program on an aggressive timeline, i hope that going forward we can encourage more communication and efficiency. it's important to remember that both hatch/waxman and other fda programs are the result of strong bipartisan work and as we move forward the re-authorization of the generic drug user fee program next year it's critical that our committee's tradition of bipartisanship on these issues continue so i'm looking forward to working with the chairman and all of our colleagues to ensure the fda has the tools and resources it needs to serve families and communities safely and effectively. today's hearing is also an important opportunity to talk about the related larger issue of prescription drug access and
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affordability in our country. nearly half of our country's population and the sadly, the status quo is working all too well for some bad actors at the very top, and they're doing everything but putting patients first. when someone comes along to rig the system in favor of his profits above access without regard to research investments
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or patients' outcomes we need to act. we are in the cusp of major breakthroughs in personalized medicine and there's real momentum around tackling some of the greatest medical challenges of our time like cancer and alzheimer's and we have to ask ourselves how we are going to guarantee we have the research, the market and the access to make sure the benefits from that lifesaving progress are felt across the system as a whole. we also have to make sure that insurers are covering their fair share. we made important progress capping out-of-pocket spending as part of the affordable care act, but there's more work to do to ensure patients are not being saddled with too heavy a cost burden and i'm especially concerned that we must prevent carriers from discriminating against patients with the most expensive illnesses. in addition if our goal is to make sure patients have access to and can't afford the best, safest, most effective cures and treatments, we have to consider the resources we're putting into this effort.
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because the truth is we simply can't realize the goal of access quality and affordability without the fda and the nih at full throttle. if you want the fda to be able to approve drugs more quickly without rolling back the gold standard of consumer safety and protection, then the fda is going to need more support to do its job and if you want the nih to be able to drive inknowvation that delivers on so many patients and families' hopes that is going also require sustained investment. i was pleased that democrats and republicans were able to come together to boost support for the nih through the spending bill last year, but i see no reason to stop there. in fact, as i have made clear, i believe as part of our committee's effort to advance medical innovas ftion for famil it is critical that we increase mandatory funding for the fda and for nih. and i hope that's something we can continue to work on together. as we look for ways to improve
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health care for families making sure that prescription drugs are accessible and affordable has to be a top priority. finding solutions won't be easy. these are challenges that cannot be ignored. and i'm confident if we all come to the table ready to join together towards the common goal of ensuring our health care system works for families and puts their needs first, we can make real progress and deliver results that so many families and communities are waiting for. thank you, mr. chairman. >> thank you, senator murray. i'm pleased to welcome dr. janet woodcock as our witness for today's hearing. thanks, dr. woodcock, for being here. we know you're very busy running that important center at the fda. dr. woodcock's been director of the center for drug evaluation and research at fda which performs the critical task of ensuring safe and effective drugs are available to improve the health of americans. she's been at the fda about as long as we've known generic drug approval about 30 -- about 30 years and she's led many of the
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fda drug initiatives including the critical path initiative, she's been a senate director since congress passed the generic drug user fee amendments in 2012 so she's the leading expert on this program. dr. woodcock, we thank you for coming and look forward to your testimony. if you can summarize it in about five minutes, you have several senators here who would like to have a conversation with you about your -- about your testimony. >> thank you, mr. chairman. ranking member, members of the committee, i'm very pleased to be here to talk about this important issue. the hatch/waxman legislation that established the generic drug program has been extraordinarily successful for the public. as chairman alexander said about 88% of dispensed prescriptions right now are generic. estimated to save -- has saved the public about $1.7 trillion. in the last decade the generic drug industry being very successful grew very rapidly. and it also globalized its
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manufacturing making drugs all around the world. fda's generic drug review program in contrast did not grow significantly and we fell behind in both review and inspection capacity. and a backlog accrued and began to build up of pending applications. in response to this, in 2012 congress enactnacted a negotiat agreement between the industry and the fda to address this and modernize the program. it's a five-year program during which industry would pay $300 million a year in fees for service and fda would attempt to meet a progressively more difficult series of performance measures that have to do with review, but many other activities as well that are summarized in my testimony. in the three years since this was enacted, fda has met and in
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many cases exceeded all the performance goals that have been established. this has been a formidable task. these three years we have been managing over 6,000 generic drug applications. about 2,500 that were piled up at the start of the program that we had not gotten to and then almost 3,000 that were submitted since that time. far exceeding expectations for the number of applications that would be submitted each year. over 90% of all these applications have received some review by the fda at this point. 90% of the 6,000. they've received some kind of communication also. and over 1,700 have been approved or tentatively approved. we tentatively approve when we can't approve yet because the
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patent is still blocking full approval. last month alone we approved or tentatively approved 99 generic drug applications. how this was accomplished is detailed in my written testimony. it's a very complicated picture, required us to rebuild the entire program from the ground up. but none of this could have been done without the incredible dedication and passion of a lot of people at the fda. i will tell you, mr. chairman, ranking member, that the people at fda share your passion for ensuring that the families and communities in this country have access to affordable drugs where at all possible. i'd really like to publicly thank all the people who work so hard and so long over the past three years to make this program work. it has been an incredible effort. the staff in the office of generic drugs who have worked
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extensively long hours, overtime, continued, got the job done. the staff in the newly formed office of pharmaceutical quality that has totally revamped how we do the quality review, the staff in the office of regulatory affairs which is our field organization that not only has ramped up and hired and done more inspections, but actually volunteered and help do some of the review work so we could get these applications reviewed. and all the other people who pitched in. and we had people in our laboratories and ora laboratories who put aside their experiments, they put their experiments on hold, so they could review parts of generic drug applications that they were qualified to review. the heroic staff who really launched our new informatic platform, we all know about the huge i.t. implementation, it is never pretty. and we had multiple legacy
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systems, all the data had to be transformed and cleaned up and put into a single system, and we were in the depth of despair a few times but we have gotten through that. we're running off a new i.t. system. it has already proven its worth and i thank them, because they really went through a lot. the financial staff who had to set up a fee collection system from scratch and collect all these fees and allocate them appropriately. and our hr and admin staff who helped us hire over a thousand people, more people, to get this job done. we would not have done it without all of them, and i think we owe them a great deal of thanks for making this program work. now, discussions about the backlog and so forth i'd like to have in our back-and-forth conversation because this is a complicated issue, but i think the news is good news. it's not bad news. and i recognize that there remain a number of challenges
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that we all need to address collectively but i'm really sure because we have gotten through the worst of this that we can deal with the challenges we have ahead and i really look forward to your questions. thank you. >> thank you, dr. woodcock. we'll now begin a series of round of five-minute questions. dr. woodcock, i think all of us on the panel, every senator, may be interested as drug prices that are as low as is reasonable. the statutory mission of the fda is safe and effective drugs. it's not to set drug prices. am i correct? is it also correct, though, that one of the effects of the -- and you just said in your testimony -- over the last 30 years of the hatch/waxman amendments and the generic movement that's gone from zero to 88% has been a massive reduction -- or avoidance of higher drug prices. did you say $1.7 trillion in savings? [ inaudible ]
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>> $1.7 trillion it's been estimated. >> $1.7 trillion. and it would make sense we should focus our attention on ways to continue to make generic drugs available to as many people as possible. two ways we've sought to do that in the committee are to avoid unnecessary regulatory burdens and to make sure we have a competitive marketplace where -- where prices are low. i want to ask you, and you invited this, really, about the backlog. 30 years ago the hope was that generic approvals could be 180 days. there's a backlog of 4,700 applications waiting to be reviewed i guess in 2012 if i'm not mistaken, then there have been a lot more applications since then. you described those. the median approval time to get review of a generic drug was 30
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months 4 years ago. today the approval time seems to be higher, 48 months. and you're approving about the same number of new drugs. yet over that period of time you've collected a billion dollars and hired 1,000 new people. what can we do about the backlog and the approval time? help us understand what the facts are. >> well, let me walk you through this. it's a little complicated. the backlog applications that were sitting there in 2012 when we put the program in place, okay, have been there for 40 months. we've approved a lot of them. we've taken action on 82% of these. all right. some type of action. we've gone back to the manufacturer, they've withdrawn some and so forth. right.
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but they have been there since 2012. so, even if we approved all of them tomorrow, their approval time would be 40 months because that was 40 months ago. and the longer it takes just like the rest of us, they're not getting any younger, okay? so, those applications that were sitting there in 2012 are going to eded ed at minimum have a t approval time of 40 months because they started 40 months ago. the ones we're getting in now have a due date for a complete response of 15 months. we have already approved some in the previous cohort last year that had 15-month time frame. we approved a drug in nine months. >> you're saying the new applications have a different median time. >> they do. they were the first one that had goals. none of these others, the 2012 pending and then the first two
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years of the program had no goals assigned to them. >> what about the number of approvals today as compared with a few years ago? >> if you look at the chart in my testimony, you'll see that we didn't do -- in the first two years, we didn't jump up approvals. it was pretty much up and down. in april of last year approvals went up, and they have stayed up. and as i said last month we approved or ta'd 99 generic drugs. so, we're on a path to get these efficiently out the door now. we had to build the program. we had to get this i.t. system. we had to hire and train these people -- >> let me ask if i may one more question and i don't want to go over my time. i want to make sure that you're making the distinction between what a guidance requires and a regulation requires. i know the office of management and budget is interested in that. and i've heard some concerns about one proposed guidance on
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quality for generic manufacturers that would impose new obligations to submit reports. are you -- are you making a distinction between guidances which are -- don't have the rule of law and regulations which may have the rule of law but do require a1chi certain amount of public comment? >> we certainly do. and we have, as part of implementing this program, we've put a policy office in the office of generic drugs and established a new policy office in the office of pharmaceutical quality which does the quality regulation. and both of those offices, part of their function, their staff, partly by lawyers, is to make sure we follow good guidance practices and follow the appropriate practices for regulations. >> thank you very much, dr. woodcock. senator murray. >> dr. woodcock, as i mentioned in my opening statement, hatch/waxman have been an incredible success and provided patients and families with
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access to high quality, lower-cost drugs and building on that success this committee's bipartisan work to pass the generic drug user fee amendments provided fda with the resources to tackle existing backlog. some are now saying that the backlog of generic applications remaining at fda is part of the reason patients and families are experiencing high drug costs. how do you respond to those claims? >> the high drug costs are driven by multiple factors, but one would be -- might be lack of competition, so is there a generic competitor for the innovative product and those we call the first generic, the first generic to get on the market which begins to lower the price. we've looked at all these backlogs and there's nothing in that backlog that would be a first generic potentially, even if it's one or two applications, either of those could be the first generic. that we haven't looked at.
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now, we can't approve applications even as a first generic if they don't meet our standards if they are substandard in some way or if they are incomplete, so we may not always approve every application comes before us that's a first generic, but we expedite those products. >> the first generics. >> we absolutely do. they get a pass through the first process. and i can assure uf thyou that backlog in 2012 and that we've largely looked at there's nothing that hasn't been looked at and given attention that certainly would provide a first generic. >> when fda does approve the potential first generic applications do companies usually market the generic drugs right away? >> we don't understand the behavior of companies and, of course, sometimes difficult to ascertain what they're doing in the market as senator collins'
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hearing with the ageing committee demonstrated, we have noticed often companies will not market a product. sometimes for a significant amount of time after they received an approval for first gener generic. >> okay. yesterday the hhs assistant secretary for planning and evaluation came out with a report about the generic drug market concluding that generic drug prices are not the primary driver of the high drug costs facing many patients and families across the country. the report found that the generic drug market as a whole is quite competitive, although some segments have experienced large price increases. what type of competition exists for innovator drugs currently on the market? what does that mean for patients? >> with your permission, i'd like to bring up a slide, if i could. this one i think would be good. now, this shows -- it's just a simple bar chart. it shows the 99 on the left is
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the number of innovator drugs that only have one generic competitor. there's 66 that have two generic competitors. and all the rest have three to ten generic competitors which have been shown to really bring the price down when there's that much competition in the market. in addition, could i have the pie chart? if you look at this pie chart, this is all -- if the picture of all the drugs that would be out there. if you look at the silver slice, that's innovator drugs that could have a generic competitor but don't. and many of those are orphans are very small market drugs. >> okay. >> so, there is a remaining group of products, it's small, but that's where we see a lot of the action as far as price changes, when generic competition is possible. >> okay. i'm told that it typically takes three approved generics before we see real pricing competition kick in and prices go down.
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how many innovator drugs have reached the level of having three generic competitors? is that your number there? >> yes. you can see the vast majority have large enough sales i imagine that multiple competitors get in the market. >> and that's what drives the price. >> yes. yes. >> okay. you mentioned how the fda generics program is on its way to being a real success story because of the resources congress provided. i wanted to just ask you, can you describe the current status of fda's generics workload? >> yes. if you -- could i have another chart. there we go. this chart shows the entire workload at almost the current time. at the top the number -- this is too complicated i'm afraid. but at the top the 62018 is all the applications we've had to deal with since the program started. all right? the bottom number, 600, those are the ones that haven't
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entered review yet. so that's only 10% that haven't entered review and some of those were submitted very recently, all right. 2,400 we're back -- we're in the stage of back-and-forth with the companies, all right? so we're going back and forth. we're trying not to have the multiple cycles like we had in the past, but get the issues resolved during the review process and try to get to a first cycle approval. >> so, when people say backlog, it's not like the drug is sitting there and nothing is happening to it. it's part of the backlog even if it's been withdrawn by the company or you're going back and forth with the company. >> well, this is simply the overall workload. and the backlog was something that existed at 2012, bingo. there it was. in the future we're not going to have any backlogs. if we get 1,000 drugs submitted a year, applications, we're going to have a bunch in
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process. they won't be in backlog because they'll have goal dates. they'll simply be moving down the process. because we have a lot of them that don't have goal dates now, although we've assigned them action dates, this is a better description of where they are, even though it's overly complicated. you can see almost 600 have been withdrawn by the firms and we've approved 1,500, tentatively approved 268. and we're working on these 2,400, so that's 4,000 that have been approved, tentatively approved or we're talking to the companies. >> okay. thank you very much. >> thank you. >> thank you, senator murray. the next senator collins and casey, then cassidy, and then franken. >> thank you, mr. chairman. thank you for your service and your work to expedite generic
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drug applications to make prescription drugs more affordable for consumers. i know that you're familiar with the investigation the aging comm committee is doing to the sudden aggressive price spikes that some companies have implemented on drugs that have been on the market for literally decades. one deraprim is 63 years old. and yet there's been a 5,000% increase in its price by a company that invested not one dime into the research and development that led to this drug. so, i'm concerned that our current regulatory structure doesn't take into account situations where there is essentially a market failure. because the population of patients may be small, there's no generic application, whether
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it's pending or not, it just hasn't happened. now, i know that the fda currently provides an express lane review for certain generic drug applications including first generics and those that would help solve medical drug shortages. could you give us some idea of what the timeline is for the expedited review for drugs for the first generics or those that are in the medical shortages category. >> well, they get to the front of the queue, okay? and, of course, with so many applications coming through, we can expedite different things. we have to treat them fairly. all would get expedited in the same way, so they get extra attention. they get moved to the review queue front so they get reviewed
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first. and people shepherd them through. but if they are substandard in any way, under our new process, of course, we'll call the manufacturer and try to get that application repaired. but say we go inspect the facility and it is substandard, we're still not going to approve that drug. but we do move them along as fast as possible. now, for the cohort that comes in after september of this year, there's going to be a ten-month review clock. that's the goal. so, all -- that's for all generic drugs. so, somebody who submits a generic drug october 1 of this year can expect a ten-month review. and if we're successful, they will get an approval at the end, not, you know, a lot of questions about their application. so, that's pretty expedited as it is, especially since they have facilities often in china and india and different places around the country you may have
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to check. >> let me ask you about a situation with two of the drugs that the we're looking at the aging committee's investigating, isoprel and nitropres. these two drugs once had fda approved generic competitors, but over time those competitors left the market. and now there's only one manufacturer left. so, if a new manufacturer were to come in now, would that application be expedited? >> that's a good question. and we will take it back and try to figure out what our policy should be on that because it would be akin to a first generic although technically not a first generic. >> that's why i asked it. >> part of our problem is knowing who has marketed when. these people sort of come in and out of the market, if they don't withdraw their applications it's hard to say if they're marketing
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unless we get notified of a shortage in which case it becomes clear. >> the other issue, related issue that i'd ask you to work with us on as we try to come up with solutions to the market failures is figuring out what the length of time for an expedited approval should be that would discourage the company from buying up a decades-old drug and increasing the cost of it. if it's a short enough time, it's not going to be worth the amount of money that the manufacturer -- well, they're not manufacturers, they're more like what i call hedge fund pharmaceutical companies -- would pay to get the rights to that drug. so, one of the ideas that i'd like to work with you on is whether there's a way to take away the incentive by having
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this expedited approval that would encourage a generic to come in and discourage the company from buying up the decades-old drug. thinking it's going to have a monopoly long enough to make a great deal of money. >> we'd be happy to work with you. we also have to consider there is development work the company has to do, they can't just turn a switch and start manufacturing a drug tomorrow, so there is that time that has to go in as well. >> what we're finding is that a lot of these companies are not doing the manufacturing. and so it's a very new and interesting business model, and i'm convinced that it's one that is really negative for patients, providers, hospitals, and for federal and state health care programs. >> mr. chairman, may i just make
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an editorial comment? >> sure. yes. >> thank you. we've talked to some members in the house and some of you all about advanced manufacturing in our efforts on this. why we'd like advanced manufacturing, we're trying to push it with the industry is that allows them really to turn very quickly and really ramp up very fast. >> you want to define advanced manufacturing, what you mean by that. >> certainly. the potato chips and m&ms and all sort of food in this country and fine chemicals are made in computerized lines and even with robots. pharmaceuticals are not made that way. they are made almost like cooking would be familiar or pharmacy compounding steps and we are really trying to push to move to modernized, computer-controlled, continuous manufacturing. it's much more efficient and effective but, of course -- >> talking like 3 d printing?
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>> 1we approved a 3-d printed product this year. that's one of the aspects that enables doing things like that, yes. so, that's an aspect i think that we really should explore to provide agility into the system. thank you. >> thank you, mr. chairman. i apologize. >> no, thank you, and thank you, dr. woodcock for that. senator collins in the committee on ageing you and senator mccaskill have done a lot of work on this subject. we know also you don't have legislative authority, so we welcome the work product from your committee over here as we work on our legislation. senator casey? senator franken? >> thank you. i appreciate senator collins' questions, and part of your
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answer on -- it seemed to suggest that the data that you have on the market is not totally complete. >> that's correct. uh-huh. >> okay. and is there anything you can do -- is an aspiration of yours to make that data complete, more complete? >> it's very difficult to figure these things out because as senator -- >> who would do that, do you think? >> well, i believe senator collins' hearing they talked about the contracts and the rebates and the -- all the different things in the u.s. distribution chain that nobody really knows the answer to. the insurers i think would really like to know how these drugs are moving and what is actually being paid for them at different steps but they don't know. that is what i took from the testimony. and we can find out sort of ex
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post facto by looking at what has been dispensed at the end of the day and putting the picture together, but it's very difficult to say who -- >> trying to figure that out would inform what you're approving -- what you're taking up to approve because you want to make the market more efficient. i want to ask you about an article in "the wall street journal" this week. i'm sure you've read it. it was by the ceo of a drug compounding company. and he suggested that basically he pointed to a drug he -- that his company did, and we took up compounding in this committee and a number of us, including the chairman and senator roberts. but he was basically saying that
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he -- he did successfully compound a drug, a generic, that had been one of these drugs that they exploded the price on, and he got to market by compounding this. we saw the risks associated with compounding, but then we also gave the fda authority to, you know, to regulate compounding. you read this piece. do you think that there are risks to this, or are there -- is the upside -- what's the upside and what are the risks? >> i believe there are very great risks. the congress established outsourcing facilities as part of the re-establishment of compounding several years ago. but those are for sterile
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injectables. the tablets would be compounded by -- could be compounded by any compounding facility under this -- what was being proposed. and in the last two months we've dealt with two outbreaks, all right. one was vitamins where they compounded vitamins in excessive, way excessive, vitamins were put into the tablet. people were hospitalized with kidney failure. the second one -- >> are vitamins considered supplements which you don't -- >> no, we regulated those. >> okay. >> we intervened. we were able to track people down. the second one was a hormone. it was 1,000 times more potent than it was supposed to be. >> okay. >> people ended up in the hospital very sick and these were small outbreaks. the pharmacy and us together were able to track these people
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down, the people who were still not in the hospital, make sure they were, you know, the drug was recalled. but a mass production of drugs such as to substitute for a generic or an innovator drug that's out there under noncontrolled conditions, i know everybody talks about regulatory burdens, but what we ask them to do, you know, is make sure they do the right thing each time and this is what happened. they put in too much. they used the wrong source. they used an ultraconcentrated source and they put people in the hospital. and if they'd been making thousands of these tablets, they could have put thousands of people in the hospital, so that's what we face. if the -- if alternative sources that don't have good manufacturing practices are going to go into mass production. >> i'm out of time. but so -- i'm out of time. i'm out of time. >> but that's a very helpful
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question about two important pieces of legislation before this committee. that's very, very interesting discussion. >> thank you. >> senator robert -- senator cassidy. >> thank you, dr. woodcock. i echo senator collins' kind of compliments of your work and also i always appreciate your straightforwardness. a couple things, first to play off i think -- oh, i forget who it was someone asked about backlog applications you said 85% of those that were pre this legislation have had some action that means 15% have not. i can imagine if you are one of the 15% you are just, oh, my gosh! secondly, 85% have had some action. that action might have been to kick them back. so, any comments on why is that 15% still kind of in purgatory and the 85%, et cetera? >> when we negotiated this agreement with industry, they were realistic that we weren't going to be able to review 6,000 applications in 3 years and hire
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1,000 people and rebuild our entire generic drug system and totally reorganize all of which we have done. so, the goal was we clear out 90% of the backlog applications by the end of the program, five years. that was the agreed-upon goal with industry, all right? with no other intermediate goals. what we have done we've already gotten back to them or worked on 82% of them. >> got you. don't mean to interrupt. i just have a short time and i got so many questions. >> okay. >> i'm also told by industry and i've learned to say what i've been told and not what i know. when you mention the incomplete or loquat applications because they're loquat because between the interval that it's submitted and it's reviewed the standards have changed. it's now loquat not because it was at the time of submission but it's loquat low quality at
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the time of review. have the standards changed between the time of their application and the time it is reviewed? >> we absolutely do. we are issued many more guidances. they are like a cookbook or recipe. >> the follow-up question, therefore, implied, because they tell me it's not the case, it has been made public the guidance as to what is a good quality application? >> we try. i mean, there are things such as we've gotten applications where they've cut and pasted portions from another application, totally the wrong application in there. it's hard to think of every single thing that people can do that isn't right. but we do try to give guidance and having a policy offices, we definitely aspired putting out much more guidance to what -- and training on what is acceptable. i have a slide in -- >> can i move to something else? >> yeah.
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>> because i'll accept your explanation and, believe me, i'll hear from them. next, following up on what senator collins has said but also relating back to testimony you gave to the energy and commerce committee a couple years ago when i was on that committee. one of the reasons for drug shortages there has been a concentration of drug manufacturers. >> that's right. >> if there's a quality problem with that one concentrated facility, then, my gosh, it ripples through. what i'm told that there is a facility fee and, therefore, if you only have one facility or if you contract out to a cmo, a contract manufacturing organization, that somehow you lower the facility fee. it would require us to change that. but because of this we've had a concentration of manufacturing units. is that a fair assessment? >> i don't know whether that's driven, a concentration, or not, all right. i think there are many factors but that could have been one. and we are certainly considering that in discussions for the next program.
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>> so, then, you are actually -- then we should consider that because it would require, say, a substitution of a product fee as opposed to a facility fee. fair statement? >> there's many different ways it could be. we're trying to make the fee structures as fair as possible. that the burden is shared appropriately among the people who benefit from the program. >> do you have a list of how many manufacturing units if you will there were or how many cmos were active before the legislation and what is the number of manufacturers, you know, facilities if you will now post the legislation? >> one of the innovations was self-identification and that, so we have one at 2012 where everybody had to put up their hand and say we're making a generic drug or we're making an active pharmaceutical ingredient so we have it for probably those three years. but not before. >> still if you had it when you started and you had it now. in '12 and now, do you have that number? >> we can get back to you on that. i don't have that.
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>> and could you require the drug manufacturers to publish or could you acquire, we're making these drugs and we're contracting out to cmos for this and kind of have that as a real-time database? because we need to know if we're concentrating manufacturers and you've told us that's a major cause of drug shortages and some of them are bad actors, you also told us that. some have a lot of problems, some don't. if it was made public we would know how many there were and, two, if they were good or bad actors. is it possible for you to make it available to us? >> we could give you the overall numbers. we could try. but i think making the actual people public would probably require either regulation change of something -- >> a statute for us to do. >> yes. there is registration and listing that is done now, but it is -- we have different problems with that which we could get back to you on. >> thank you, i yield back. thank you. >> thank you, senator cassidy.
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senator warren. >> thank you, mr. chairman. you know, everyone is here looking for ways to bring down the cost of drugs. both brand name and generic drugs, but we can't do that if we don't correctly identify why the prices are so high. some people want to blame the fda for high prices saying that if the agency would approve generic drugs faster, then the drug pricing problem would go away. so, i just want to dig into that claim a little bit. let's begin with generics competing with brand name drugs. according to an analysis by harvard researchers it takes an average of 12 1/2 years for a brand name drug to face competition by generics. and no doubt if those brand name drugs had to compete with a generic drug they would be cheaper. but the law is clear the fda can't bring a generic drug to the market if the brand name drug is still protected by
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exclusivity or patents. is that right? >> that's right. >> okay. then, let's look at how long the generics are lelgally allowed o the market. how long does it take the fda to approve a new application nor a generic drug? >> that's in flux. this year it will take 15 months on average to get back to the firm. if they sent in a complete application we could probably approve it. >> that's a new application. >> the ones submitted this year. >> and what commitment time are you looking at going forward? >> next -- in september -- in october of this year if you would submit a generic drug application you could expect to get an answer back in ten months. >> in ten months. you're going from 15 months to ten months and you feel like you're on target at least getting the pieces in place that that looks like it's going to work. >> that is doable. that's correct. >> i want to measure that
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against the claim that the average time for fda approval has increased. now, you've talked about the backlog and the difficulty of dealing with applications that date back back years. but the average time for new application, is it going up or down? >> they haven't reached their time to get approved. the goals only kicked in last year and that was a 15-month goal. they are committed to a shorter time period. >> let me ask you another question about this. when a company suddenly raises the price of a generic drug, obviously approval of a competing generic drug would bring the price back down.
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doctor, does the fda expedite applications when there has been a price spike? >> no. >> why not? >> we don't know. we have to be fair. there is a lot of lawsuits around generic drugs and they have to be fair. we don't know what a price spike is. it's $875. we don't have the expertise to determine. we are not economists or finance people. we are doctors and lawyers and scientists. >> is it legally clear that you can do that? can you use that as a criteria for deciding to expedite on a drug or is there ambiguity about that? >> there might be ambiguity, but if congress directed us -- >> i just asked about where you are. >> i don't know the answer to
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that, but i imagine it might be possible. if there were some bulletproof definition, you doubled your price from a dime to 20 cents. i think that's helpful. we will look at the proposals on the table today. yes, congress can make sure that the fda has the funding and the personnel it needs and there is room to improve drug approval processes as the new user fee program is implemented. there could be limited situations where the fda might be able to expedite the review of the drug to lower prices. that should help. let's not kid ourselves. making those tweaks won't solve the problem. the market for prescription drugs has little transparency and has broken twice elasticity. we can make small changes to how
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the fda approves generics, but real change will require us to face the fact that the market for prescription drugs is not working. and rethink the overall structure of drug pricing. thank you, doctor. >> thank you, mr. chairman. >> thank you, senator. i have senator roberts and senator casey. and senator murphy. so senator roberts. >> you are an excellent witness. thank you for your clarity and
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comments. in addition to the new user fees, regarding generic labeling. they are spending on generic drugs by billions of dollars, in 2015, you proposed a quality metrics program through draft guidance. that would require manufacturers to collect new information. they collect and report information from the cmos. the generic drug manufacturers have raised concerns for everybody regarding the competition of data increased information technology and require the significant efforts to resolve. if the reports are to be
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required and ensure high quality generic drugs, i would pause here and say this is the first time that my house career would propose more rule making. rule making rather than a guidance at where there is no responsibility to look at the impact on small business. they can't respond to comments at which to me seems to be very personalit important. >> what we issued in quality metrics, the request for comments and the draft guidance is not actionable. it is a request for comments. we did receive a great deal of comments on both of these and we are in the time of digesting the comments and we will take
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appropriate steps after we have gotten feet backs. both from the innovator industry and it's one of the few times that they appear to be united. we will get that into consideration. >> i have already been asked by members. >> the definition raised lie senator murray your testimony, you highlighted the challenge of submission quality and the question is have you made public in guidance or what the good quality submissions is? you released that? >> it's a series of different
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guidances for example the products specific that tells you if you are going to copy this, here's how you should do the study. we have really ramped up the issuance of those. >> how many folks do you have doing this? >> the guidance development? >> we are talking about 2015 and everybody left behind and those in the future. how many people you have, 1,000 people doing this or what? >> there is about maybe we added
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70 new inspectors and the program is probably 3,000 people overall. >> i appreciate that. i have 30 seconds left i will yield back to senator franken. >> it will take me about 25 seconds here to call. i will yield my time. >> thank you. senator casey. thank you very much. great to have you here and thank you for your testimony and your service. i wanted to focus on an area you have spoken to, but i'm not sure this question will be asked about the so-called -- i have to be careful with acronyms here.
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the other and the elements. the basic question i had was when you testified about some of the challenges that you have been implementing a shared risk evaluation system, can you outline the challenges you face and if any, what you propose as solutions? >> when congress in the fda amendments act put in the rim, they had to contemplate and they had a risk of mitigation system that is supposed to have risky drugs to mitigate the risks. we approved drugs with rims if they are risky. when they go generic. they also need to have this risk system around and congress in
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order to decrease the burden, they said if at all possible there would be a single shared. this is proven to work together to get a market share and proven very challenging to get back on. that has delayed access. in addition they may restrict who gets the drug. that has been used as an excuse or whatever to not give the drug to the generic so they can compare it to their drug. all of these barriers and delays in getting generics had companies on their own behalf. we don't really understand. we had 100 inquiries that can't getta ahold of the innovator
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drug to compare their drug to. we have done everything we can to write a letter and say they don't require this. you can give it out for this purpose and so forth and we always refer these to ftc. okay? we still continue to get complaints from generic companies that they can't get ahold of the drug to make the comparison. i want to understand the problem we face. why has it not worked? >> i think the innovator companies feel it's their duty to their stockholders to delay competition as long as possible. that's the kind of petitions we get and all sorts of things to delay generic competition and this is another opportunity. >> what would you hope we would do if anything some.
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>> the part of the rems position is a fact of the matter that declares defeat. we go ahead and let them have their own system of separate but equal. if that were removed from the statute, we can just go to that and not have it delay. that won't fix where the company is not providing. we have a way of not providing the drug to the generic company and that would require discussions. >> thanks very much. >> thanks, senator casey. >> it's not often that a united states senator has a chance to introduce a significant piece of legislation and see it be
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successful as this has been takinged the number of generic drugs from zero to 88% of all the prescription drugs. we welcome you to a hearing on your bill. >> i'm happy to do that. it was a battle between the industry. the pharma companies at one point, they both jumped up all three of them and decided to ram out of the office and two of them, they got to the door and two of them got stuck in the door. we all started to laugh and i said come on back. there was one point where i said i'm going to kill both of you. there were three and two of them were bad. i got irritated. i had a bad tooth at the time. to make a long story short, we have been pleased with henry and
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he deserves a lot of credit at that time. at the inception in october of 2012, there were approximately 2800 generic applications awaiting and the average approval time for an application time is 30 months. going into the fourth year, the backlog increased to 4,000 plus applications and the average approval time for an application and to 48 months in 2015. this is eight times longer than the review time called for by the act. that's one of the bills in 2013.
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show a declining trend in approvals. the generics with 535 in 2013. 500 in 2014 and 346 in 2015. a critical subset of approvals are first generics. first generics offer a first opportunity from the savings provided over brand drugs. it's staggering to think of the savings lost in the health care system. i want to thank you for the work that you do. you do a terrific job and i recognize it. would you agree this backlog
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keeps safe low cost generic drugs off the market and reduces competition. just yes or no. >> yes. >> i thought you would. let me go further. will the backlog be eliminated before the backlog? >> absolutely. >> we have acted on 82% of those. >> okay. how many applications refer to the products and has the agency received since they were implemented? >> that i don't know. >> would you provide that to us? park we can get back to you. >> how many first applications of missed approval on the earliest possible date of three years have you had that knowledge? >> it's a small number.
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>> will you submit for the record the target action dates penting before the agency without naming the applicant and the associated reference products. >> we can do that. >> how do they track prioritization of applications such as those associated with public health needs or shortages or first generics and what is the average time for these critical applications? >> we track them through the new it system and we have project management over all of these applications now. so we have a project manager aware of each one of them. making sure it moves properly through the system. we can get you the numbers.
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we were only 16 to 18% when we did that. today it's approaching 90%. that has been a very, very good thing. some people have played the market and the start of it. we want to get to the bottom of this tonight. the end of this, i intend to help every step of the way. i want to personally thank the people. it's a hard job. you have all kinds of pressure on you and all kinds of irritations and comments and screaming and shouting. we don't give you enough help to do it. we also had the author of the realization act of the facility.
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30 plus over this area. i hope to keep going because the generics are critical. that's critical to our federal budget and critical to the success and reputation of the fda. hopefully if you see any changes of other bills that you are subject to, you think it would help and we would like to hear from you. >> i may have made a statement earlier. i said there were no generic drugs 30 years ago. there were some, but they had to go through the whole process. what would be the accurate way to describe the percent of generic drugs? >> they were not well uptaken because they had quality
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problems as well. it was put into place and quality and acceptability of them. there were some drugs ought there. at that time. >> so it varies. senator murphy? >> thank you very much, mr. chairman. thank you for your service. a comment and a question. the comment is an extension on the point that the senator was making. i hope we will spend time and attention for the federal budget and i would agree that we will place two great a share of the blame on the regulatory process. there efficiencies that we can gain and i agree with her. it's worth restating that what is exceptional about the united states is the way in which we
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structured the market for drugs. we are virtually the only country in the world that doesn't have a process for capping and controlling the process. the result of that is that american consumers and the u.s. government bear the lion's share of r&d costs for the entire industry globally and the rest of the world consumers are free riders. second and more difficult to talk about is the fact that if you take a look at the 16 publicly traded companies that sell the best selling drugs in this country, half of them are taking in a greater profit at the end of the year than they are spending on research and development. that's 2014 numbers. we have discovered and dispensed life-changing drugs because of the profit built into the system. those are stunning numbers.
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my question is a very specific one. you ended your testimony with a set of challenges and barriers. one of those that you outlined was this problem in which we don't have a convincing bioe 85 lens test method available. that's worth exploring. you have money to try to develop the pathways and so you also caution us that it takes time. can you tell us a little bit more about the timing of that research and how we should judge the effectiveness and to the extent that we have been successful in getting another $2 billion to nih, what's the degree of cooperation, what can they be doing to solve this problem? >> thank you. >> nih doesn't it typically do this research.
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what we are talking about here is that drugs are not systemically absorbed are hard to determine whether the bioequivalent to the innovator drug. that would be the creams and lotions and topical agents as well as inhalation drugs and we have a new category of complicated drugs out there that also are going to pose problems and characterizing them and making sure they are the same as innovator. samular to the biosimilar's problem. you can judge if it's going to bear fruit. we can issue draft guidance and they will have a new test in it. we might do workshops before that. to get the specific community on board. we would say instead of having to do a clinical trial and all
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that entails, compare the trial and you can use this test. you put the cream on these people and the other cream on the other arm and measure something or whatever we say. that would stand in for the bioe 85 lens results. that would improve uptake in a generic competition where they are not systemically absorbed drugs. >> forgive my ignorance, but these would be for classes of drugs, types of treatments or specific drugs or treatments? >> it would probably be for drug classes. sometimes for specific drugs other times. >> do you have enough funding to get to where you think we should be years from now or ten years from now in terms of the amount of guidance to keep up with the pace of technological changes. >> we will have to get back to
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you. we invested a substantial amount and we invested $24 million. we are having a lot of research done. to understand the implications and translate it into policy and guidance and educate the world on how to do these studies. this is the key to some of that silver gap there of drugs that don't have generic competition at all. it is too expensive or impossible or infeasible to figure out how to show they are the same. >> thank you very much. >> thank you for being here. i will continue on this same theme. it strikes me -- i'm not an advocate for government price controls, but it seems to me
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there s in which very clever people have either observed or created a monopoly for themselves and then used that monopoly power to extort prices that the market would not afford if it were operating correctly. it seems to me that there obvious signals of when that might be taking place. to me it's not a determinate factor if the people are in the business of speculation. if the price hike is beyond a certain amount, let's say 1,000%, again, not fully determinative, but that should send up a red flag. if there no alternatives to which a certain set of customers and patients can readily turn,
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that would seem to be part of the monopoly. i'm wondering if your organization is looking in any way at trying to define where the market failure is taking place and saying okay, these are red flags or you see that as somebody else's job. >> well, the report issued yesterday by hhs on some of the pricing issues gets to some issues. for the economic ones, i believe they are better suited than the f fda. we are doctors. >> the fda is not looking at that. >> we look at sole source. that's a red flag there could be a shortage. there is only one manufacturer and if something goes wrong, that's a big problem. if you can show that -- >> from a shortage point of view as opposed to price manipulation? >> that's right. if you can show the bar chart.
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we look at those that have few competitors. some of the ones in that chart there, where they only have one generic, that might be the only drug on the market. the innovator may be off or there is two. those are areas where there is not a lot of competition or could be a shortage or loss of product. >> for strikes me if we can correctly define the characteristics of the bad behavior that everybody on this committee sees and acknowledges exists, going the long way around to try to figure out how your drug approval process can resolve that is inefficient to do it. you go where the problem is. speculators who buy drugs that don't have competition and create massive price increases and you said we will not allow that any longer. people go away and find more
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productive things to do with their time. let me ask you a different question. we had conversations about the device regulating and drug regulating side of the fda and the need for being tracked for drug device combinations and this community is obviously looking at that. what can you me about where the fda is as far as making a recommendation to us on what the drug device combination looks like. what is your recommendation? >> i believe that the fda is ready to work with the committee on this and we are very interested in looking at solutions to this problem. >> have you proposed any? >> i don't know that we have proposed legislation and i don't know where the administration is on that, however i would say from my own technical point of
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view that it is a problem. we need more clarity and we need a different path that. >> you in charge of the drug side and the device side have said the same thing. you can't do drug device combination using the process. there has to be a new process that emerges. do you think it would be wise for you on the device side to sit down and spend time making a recommendation as to how you think the drug device combinations might be best regulated? >> we had numerous conversations about this and gone through multiple scenarios. we have been eager to discuss it. >> the proposal would be obliged to implement it. thank you, chairman. >> thank you, senator. do you have any further comment?
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>> i want to thank the doctor for really important expertise and the answer to your questions, this has been an excellent hearing. we have a lot of work ahead of us. i look forward to moving forward. thank you. >> thank you, senator. let me add my thanks to you. that is a -- you have been there 30 years and one position or another. it's hard to imagine there would be a more exciting time than right now, given the rate of innovation. we have the logical tension that exists between prices, safety, effectiveness, and incentivizing and encouraging a supply of new treatments and cures and devices that will save lives. we are talking about the next
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generation of cancer treatments and therapies for als and alzheimer's and infectious diseases. we have seen what's happened with hepatitis c. you have seen what's happening with cystic fibrosis. huh a role in all of that. we are told in alzheimer's that we simply delayed on set for five years and that can save the health care system 367 billion by 2015. and the grieve and the anguish is incalcuable. there have been attempts at developing drugs for alzheimer's and only four are successful. my hope is that while we are working on safe and effective and keeping the market competitive so prices are as low as possible so we don't do anything to discourage or disincentivize the development of these-saving treatments.
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the hearing will remain open for ten days and members commit additional information if they like. the next session in our committee will be an executive session on february 9 to begin the process to produce legislation. these are bipartisan bills that are sponsored by members of the committee on both sides of the aisle. they can grow into the work that 21st century package that the house already passed. the president is interested in what we are doing with precision medicine and also with his cancer initiatives. we welcome the input on that. we thank you for coming today and the committee will stand adjourned.
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do you feel like there other steps they could take to enhance it? >> they have not overseen the drug pricing. we have no thrd in that area. we are charmed with making sure that products that could get on the market are developed and reviewed as efficiently as possible. we have a huge strategy on that. i believe we have sufficient resources on the review side. hopefully on the inventory. the person side, we will get back to them. not only do we have the non-systemically restored
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products and methods, often a different one for each one, but we have the complex drugs and we are seeing more and more of those. we approved the generic and it was a benefit to the consumer and that is a good question. he had the an sis pated work load of research and effort we have moving forward to continue to be able to improve these. >> when talking about the backlog, you said absolutely to senator hatch, this will be cleared out. why so certain? >> we have to take first action. that's the commitment. >> we were at 86. >> we are at 86% now. we have two more years.
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there will be strays. we never have 100%. there will be policy reasons or other unknown reason that we can't take an action or block by a patented dispute or different things like that. we know because of the performance that we will achieve that goal. >> you said 86 right now. i thought you were talking about 82. >> it depends what you count. it's 84 if you count just the applications. it's all in the come. we are just really cranking out and the performance of the last several years has been like we gave all the money.
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we redid skpefrg rebuilt it and we will crank the next two years. >> do you think that the fda should amend and there is a bright line here. we should think about price. as price is a bigger and bigger issue, do you think the fda needs to expand? >> no regulator around the world is involved in this in that way. they have separate entities. the national tealth care systems. what i told one of the senators, if they give us directions based on something someone else develops, we can do that. it's a slippery slope to get us
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involved. we need to stick to the science and safety and effectiveness and level playing field and the fairness. we are embroiled in the review process and we don't talk about it much. this is other legal maneuvers and that's a massive work load. and all the science through them and that's a great deal of work to have to be done. any further elements we need to prioritize or other opportunities. to delay things by suing us or saying we are not being fair or anything. it is better not to get involved in pricing issues, but it doesn't mean you can't respond
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to directions. >> most of generics are decreasing in price. this is a problem for a small area. the report shows for that, prices went down for 64% of the drugs. >> that slice that you were talking about. >> that's the innovator drugs that don't have competition. >> nobody waiting here. >> they are orphans and complex drugs. they might be ones that don't have an e 85 lens test. the market space may be too small if you have other entrants. they won't be able to make money. >> they thinking about how to do that? >> i think we just wanted to present the reality to the
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committee about where the vulnerabilities are. people in the press so you guys can correct this, they are presenting this as a giant problem. i go to the drugstore and bought a generic the other day and it was like 23 cents. in general they are affordable, but a small segment and that's what we want to present where they don't have a lot of competition. one generic, the little bar, they may not be working. there might be only one in the space. the silver part, there is no competition even though there could be. those are the areas where without competition they have a lot of freedom to change things around. >> do you have thoughts about
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why that is? what do you think? >> it's generally driven by a business opportunity. and people don't see business opportunities in these small markets or if there is a barrier because it's hard to do. you have to do a clinical trial. that is a barrier. we are spending billions on research. they say if they can get a bi bioequivalent test instead. >> we need to wrap it up. >> the small markets, the orphans and others, what senator cull ins was talking about, some of these old small volume, they are hard to make. they have to be sterile and
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everybody learned that. nobody takes them chronically. it's not a big market. how many players or where is the business opportunity? that's whyy where we are working on it. if we make receivering morage il and flexible, that helps people enter as well. >> thank you. >> heading into an all politics weekend with chris christie and ben carson. all had stops in iowa. you can see those at 8:00 eastern on c-span.
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tonight the white house chief of staff. mr. mcdonough talks about president obama's time in office and what's ahead in his last year. >> sunday on newsmakers, terry talks about monday's iowa caucuses and the impact and how this year compares to previous ones and the future of the republican party. it airs sunday on c-span. last week the senate armied services committee held a hearing for eric to be secretary of the army. he resigned when the committee chair claimed his serving violated federal law. if the nomination is confirmed, he would be the first openly gay
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person to serve as army secretary.
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>> good morning. before i begin, i would like to note it's reported that the white house has authorized the department of defense to target isil and afghanistan. many of us may be interested to know that we are confined to our
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attacks on isil to iraq and syria. they seem to be waking up that more than a year into the military campaign, isil's reach is growing. it won't cake long to realize the conditions on the ground don't warrant u.s. forces. they meet this morning to consider the nomination and we understand your mother is joining us this morning as is our tradition. we hope you will take the opportunity to introduce her. the army is at war, kefted by 15 years of war. they are confronting growing threats and less ready forces and aging development.
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the army will be cut to active duty personnel soldiers from a wartime peak of 570,000. these reductions were decided before russia's invasion of ukraine. if cuts are allowed to return, the army will clink, increasing the risk that in a crisis we will have too few that can doctor a fight. as global instability increases, they must have readiness to respond to contingencies. just over 1:3 of the army com bam teams are ready for deployment and decisive
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operations. they must modernize for the 21st century warfare. the oldiers must be trained for complex threats and the combined arms maneuver and determine insergence and equipped as it was in the 1980s. the main difference is it is smaller. many key forces like them have been reduced to the ability to field quality forces and the legacy of the army's record that the secretary said is too often the failed programs and the
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fieldings of developmental designs and far too many taxpayer dollars wasted. that is from your predecessor. the army must learn the lessons of the programs of recent years. together with the experience of more than a decade of war, these lessons must guide critical programs and including the vehicle including the multipurpose vehicle and acquisition authorities passed in the law and the national defense act for fiscal year 2016 and open opportunities for both the secretary and chief of staff to lead positive change. it won't are easy, but it has been done before. the army leaders trance formed the army before. they restored the develop and morale of the force of the vietnam war. they transitioned to an all
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volunteer force and removed saddam hussein from kuwait. the continued reduction will lead to depleted readiness and chronic modernization problems and morale. these are the major challenges the army faces. one secretary will not tackle them alone. if confirmed, you will take office with less than a year remaining in the administration. some will question what you can hope to achieve. i challenge you to be impatient if confirmed. they do not need a secretary to mark time. they need a strong secretary who realizes there is much to be done and not a minute to be
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wasted. senator reed? >> thank you very much and i join you in welcoming mr. fanning. i thank you for holding the hearing for filling the critical position of secretary of the army. i would like to thank the willingness to serve and it's my understanding as the chairman indicated that your mother is here in the audience and i welcome her here to the hearing also. mr. fanning has served in senior level positions and the previous position includes the acting under the secretary of the army where issues are leading to the operation of the army. prior to that position, he was confirmed as the under secretary of the air force and oversaw the budget and served as the chief management officer. final lly he played a role in t navy's business transformation efforts. if you are confirmed as the
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next, your leadership will be critical to lead the army in a critical time when it faces a multitude of challenges. as you know, the army draws down strength for the final goal of 450,000 in the active army. 335,000 in the army national guard and 195,000 in the army reserve. in addition, i would welcome your comments in your testimony on whether they can meet the commitments overseas with the smaller army. at the same time the army must also contend with how to increase the levels as you are aware, they have been challenged and many programs have been trunkated or canceled and i look forward on hearing your thoughts on how the army can improve the process. i welcome the decision the service by women.
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in the army closed. as general millie testified last july in the confirmation hearing and they had been doing it ten years. since that hearing, three women have graduated from the premier training school from the armed soldiers and army offices. according to the statistics between fy 10 and fy 14, the graduation rate is only 42%. this is another example of the significance of this accomplishment. and all of those people prior to these individuals were men. these three women represent the army of today and the army of the future and i look forward to the full integration of women into all of the roles in the united states army. again we look forward to your proposals and your plans and
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ideas to continue to lead and serve the army. thank you. >> mr. fanning, it's a custom of the committee to ask several standard questions and i will begin them now and appreciate your answers. in order to exercise the legislative and oversight responsibilityings with the committees of the congress to receive testimony, briefings and other communications of information, have you adhered to laws and regulations governing conflicts of interest? >> i have. >> have you assumed duties or undertaken actions which would appear to presume the out come of the confirmation process? >> no, mr. chairman. i was appointed acting secretary, but after you notified the president, i did resign the position. >> thank you. for the record, on november 30th, 2015, i notified president obama by letter that mr. fanning's appointment as the
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acting secretary of the army violated the federal vacancy's reform act of 1998. that will be included in the hearing. the senate takes with the utmost seriousness the senate's responsibility to provide advice and consent on presidential nominations. that important constitutional requirement is fundamental to the separation of powers between the legislative and executive branches. elections have consence kwenss and title to consideration of the nominations. until the senate gives advice and consent and until it is confirmed by the full senate, they may not conduct themselves in a way that presumes confirmation. each issue's guidance is on the actions they must avoid to presume confirmation and followed that guidance allows them to prepare for the duties and responsibilities that they will undertake if confirmed by
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the senate. they disregard that guidance at the peril of presuming confirmation. senator, do you have a comment on that? >> i do not. >> and is no longer serving in the active capacity. in my opinion, his resignation has cured the violation of the law, so i believe this committee is prepared to continue consideration of his nomination. will you ensure that your staff complies with deadlines established for requested communications including questions for the record and hearings? >> i will. >> will you cooperate in providing witnesses and briefers in response to congressional requests? >> i will. >> will those witnesses be protected from reprisal for their testimony or briefings? >> they will. >> do you agree if confirmed to appear and testify upon request before this committee? >> i do. >> do you agree to provide documents including copies of electronic forms of communication in a timely manner when requested by duly constituted committee or to consult with the committee
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regarding the basis for any good faith delay or denial in providing such documents? >> i do. >> thank you. please proceed. >> thank you, mr. chairman, senator reed, members of the committee, it's an honor to appear today. i would like to thank president obama for nominating me. and the secretary of defense for this opportunity to serve. in confirmed, i look forward to working with them and with congress. my mother kathy fanning is here today from florida. she was unable to attend my previous confirmation hearing three years ago. but not even the threat of record-breaking snow was going to stop her this time. nobody gets the opportunity -- >> could we welcome ms. fanning and i hope like my mother who is 104 years old you will provide secretary fanning with the same advice and counsel that i received from my mother. thank you. >> certainly no shortage of advice and counsel. i see also that my god daughter
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carolyn and her mother alison have joined us, as well. welcome. >> welcome. >> nobody gets the opportunity to serve in positions like this without the help of many people over a very long period of time. this is particularly true for me. i am fortunate to have many of them in this room with me today, and i will always be grateful for their support. i come from a family with a long history of service in uniform. two uncles graduated from west point and made a career of the army. a third uncle served a career in the air force. a cousin flew helicopters for the marine corps and another cousin was an army ranger. i learned from an early age the importance of service and developed a deep respect and admiration for the sacrifices of those in uniform and their families. i have now had the privilege to work in all three military departments with all four services, as well as in the office of the secretary of defense over the course of two administrations. all after starting my career 25 years ago as a research assistant on the house armed services committee.
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i have seen the army from every seat at the table including the army's. i was deputy chief management officer of the navy department and chief management officer of the air force and the army. i have worked on efficiencies and transformation in every part of the department of defense and look forward, if confirmed, to working with this committee as it explores the next round of defense reforms. the army is a force viewed by too many as just a number, its end strength. few understand the complexity of ground warfare like this committee does or how long it takes to build an army with the overmatch to win decisively and with as few casualties as possible. it takes a generation to build an army. it's not just the privates but the senior enlisted who lead them. and few understand the many missions of the army. in addition to fighting and winning wars, the army deters enemies, assures allies, builds partner capacity, enables the joint fight through foundational
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capabilities, and responds to national emergencies like we see today with flooding and severe weather. the army's greatest strength is, of course, its soldiers. over 1 million of them in the active guard and reserve. there are more than 140,000 of them currently serving in over 140 countries outside the united states. today, they are exercising with allies in eastern europe to deter russian aggression. training, enabling and fighting against isis and other terrorists around the world. building partnership capacity across the pacific. if confirmed, these soldiers will be my highest priority. specifically, making sure they are ready. which means ensuring they are resilient, fully trained, and properly equipped. to do that, we must create an environment where everyone can flourish. rid of the scourge of sexual assault and suicide. while soldiers are deployed, they must have confidence we will take care of their families.
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they must also know that we will take care of them when they come home. and ease their transition should they choose to leave the army. and we must make the same commitment to the future force. by investing now so that we have the right capabilities for them when they are needed. i have been immensely proud during my first six years in this administration to work alongside the men and women of the navy, marine corps, and the air force. and if confirmed, i very much look forward to becoming a part of the army family. it would be my honor to play a role in making sure that the best men and women our country has to offer get all of the support they need and undertaking the mission of defending our country. a mission for which they freely volunteer. we ask them to do extraordinary things. we owe them no less. thank you, again, for considering my nomination. thank you for your service. and i look forward to your questions. >> thank you, mr. fanning. pause a moment for business.
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since a quorum is now present i ask the committee to consider a list of 3,178 pending military nominations all of these nominations have been before the committee the required length of time. is there a motion to favorably report these 3,178 military nominations to the senate? >> so moved. >> is there a second? all in favor say aye. mr. fanning, how many roughly army and other personnel are now in iraq serving there? do you know, roughly? >> mr. chair, i understand the number to be about 4,500. >> about 4,500. and is there a status of forces agreement with iraq on the presence of those troops that you know of? >> not that i know of, mr. chairman. >> certainly not one that has been through the parliament of iraq. so, ostensibly -- and you were
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in the administration at the time -- the reason why we couldn't leave a sustaining force behind in iraq at the time of the withdrawal was because we didn't have a status of forces agreement, so therefore, it would be impossible for us to leave a force behind, yet somehow we have now 4,500 uniformed members of the military and no one seems to be concerned about the fact we don't have a status of forces agreement with the iraqis. i find that curious. let me ask you a fundamental question. in iraq and syria and the battle against isis, which is now metastasizing to where we'll have to be in afghanistan among other places, are we winning? >> mr. chairman, i think it's too early to tell. we clearly are putting a lot of pressure on isis, but they are also showing they can put pressure on us and they're not contained. but i do think we're making
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progress. recently, open source reporting of 6,400 isis fighters killed in the last 3 months. we've disrupted the supply route between mosul and raqqah, taking back sinjar and ramadi. but a great deal of work needs to be done. i do believe it's a long fight. >> do you think we have any plan to re take raqqah? >> i don't know the specifics of any plan. but we're moving in that direction. applying pressure both outside of raqqah and outside of mosul. >> but you don't know any specific plan. >> i don't, sir, but i don't think i would. in my current capacity. >> you work directly for secretary carter? >> i do. >> and you didn't know of any strategy to retake raqqah there? >> since i've returned to his office, i'm in a different capacity than i was before when
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i was chief of staff, and i'm assigned to special projects and he's been generous enough to let me focus on this hearing today, so, no, i've not been involved with him on any discussions about a plan for raqqah. >> and so, therefore, you wouldn't have any estimate as to when -- how long it would take before we could retake mosul? >> no, mr. chairman, i do not. >> you know, in the defense bill we just passed, which i know you're very well aware of, requires the reduction of headquarters staff by 25%, cost savings from overall administrative support by $10 billion over a 5-year period. committee testimony obviously is -- staffs are too large and redundant. some going so far to say the secretarial staff and the military staff should be consolidated into a single service staff. first of all, what do you think about the reductions? and second of all, what do you
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think about such a fundamental change? >> i think, first, on the reductions, i've seen this now in all parts of the department of defense. i've been particularly impressed with how the army went about it because they really did try to delayer the organization, increase the span of control for supervisors. i think this is something you never stop working on. headquarters grow back if you're not applying pressure in the opposite direction. so, i think the 25% reduction was a good start. i'd like to see how we rationalize that reduction or if we go further. as to the second part, the question about collapsing the staffs inside the military departments, i think there's a great deal of potential there. sort of fundamental guiding principles need to be, one, protecting civilian control of the military, but, two, also making sure the chiefs have the support and resource they need to give independent military advice. but i think if we keep cutting


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